Mark J. Swerdlin – Labor & Employment Reporthttps://www.laboremploymentreport.com
Management’s Workplace Blog – Information and Insights for EmployersMon, 18 Mar 2019 15:36:44 +0000en-UShourly1https://wordpress.org/?v=4.9.10DOL Proposes New Overtime Rule, Increasing Required Salary Level for Exempt Employeeshttps://www.laboremploymentreport.com/2019/03/08/dol-proposes-new-overtime-rule-increasing-required-salary-level-for-exempt-employees/
https://www.laboremploymentreport.com/2019/03/08/dol-proposes-new-overtime-rule-increasing-required-salary-level-for-exempt-employees/#respondFri, 08 Mar 2019 15:17:08 +0000https://www.laboremploymentreport.com/?p=3223In the latest development in the long saga involving the overtime rule, the Department of Labor has now issued its long-awaited proposed revision to the regulations governing which employees are exempt from the requirement to pay overtime for all hours worked over 40 in a workweek.

The Current Rule: The current overtime rule, which took effect in 2004, sets forth three tests, all of which must be met in order for a white-collar employee to be deemed exempt: (1) the employee must be paid on a salary basis; (2) the employee’s salary must be at least $455 per week (equaling $23,660 per year); and (3) a duties test specific to the exemption in question – executive, administrative or professional (EAP). There is also a highly-compensated employee (HCE) exemption, under which an employee must make at least $100,000 per year (in addition to being paid at least the standard salary level per week on a salary or fee basis) and perform at least one exempt duty.

The First Attempt to Revise the Rule: As employers may remember, the DOL issued a revision to the overtime rule in 2016. The salary levels for the EAP and HCE exemptions were vastly increased – to $47,476 per year ($913 per week) and $134,004, respectively. The rule also contained an automatic increase to the salary levels every three years. There was immediate outcry from the business community, and litigation ensued. Only days before the rule was to take effect, it was enjoined by a federal court in Texas, which found that the new salary level exceeded the DOL’s authority. Under the Trump administration, the DOL then indicated that it would issue new regulations, for which the business community has been waiting.

The New Proposed Rule: The proposed rule rescinds the 2016 rule and contains changes to the salary levels for the EAP and highly compensated exemptions, so that, according to the DOL, they maintain their usefulness in “screening out the obviously nonexempt employees.”

The DOL proposes to set the EAP salary level at $679 per week($35,308 per year). In setting this number, the DOL used the same methodology that was used to set the salary level in 2004 – the 20th percentile of earnings for full-time salaried workers in the lowest income U.S. Census region (currently the South) and in the retail sector, projected forward to January 2020, when the DOL expects the final rule to take effect. By using the same methodology to calculate the salary levels as it did in 2004 – which was never challenged – the DOL is admittedly hoping to avoid further litigation over its attempts to increase the salary level.

In addition, the DOL proposes to set the required annual salary for the HCE exemption at $147,414. As under the 2004 rule, this number is based on the 90th percentile of full-time salaried workers nation-wide (rather than the regional data used for the EAP exemptions).

As it had previously done in the 2016 regulations and for the stated purpose “to align the regulations better with modern pay practices,” the DOL has included a provision allowing employers to count nondiscretionary bonuses, incentives and commissions for up to 10% of the EAPsalary threshold. Examples of such payments cited by the DOL include nondiscretionary incentive bonuses tied to productivity and profitability. Under the proposed rule, these payments must be made on an annual (using any 52-week period or, by default, a calendar year) or more frequent basis. In addition, if an employee’s salary plus these additional payments do not reach $35,308 for the year, the employer may make a “catch-up” payment no later than the next pay period after the end of the year. This catch-up payment would only count towards the prior year’s salary, and may not be counted in the year it was paid. (Of note, the HCE exemption already permits employers to count commissions, nondiscretionary bonuses and other nondiscretionary compensation towards the total required salary above the standard weekly salary level, and permits a catch-up payment in the month after the end of the year).

Of particular note, the DOL is not including automatic increases to these salary levels as part of this proposed rule. Rather, it states that it will propose updated salary levels every four years, using the regulatory notice and comment process. Those updates will utilize the same methodology as the 2004 and now-proposed rule to set the salary levels described above.

The DOL projects that, without intervening action by their employers, approximately 1.1 million individuals will become eligible for overtime under the revised EAP salary level, while approximately 200,000 individuals will do so under the revised HCE salary level. (This is in contrast to the 2016 rule, which would have affected 4.2 million workers.)

Interestingly, in its extended analysis of the anticipated impact of this proposed rule, the DOL acknowledges that there may be some negative consequences. For example, employers may incur ongoing managerial costs related to developing work schedules and monitoring hours worked to minimize or avoid overtime. Newly non-exempt workers may lose the flexibility in scheduling that they enjoyed as exempt employees. In addition, they may lose certain benefits offered only to salaried exempt employees. The DOL also acknowledges that the increased labor costs could result in higher prices for consumers and/or reduced profits for employers. And, of course, employers may seek to reduce costs by reducing workers’ hours in order to avoid overtime – thereby disadvantaging lower-wage workers – while exempt workers may see an increase in workload to make up for those hours.

What Happens Now: There will be a 60-day comment period following publication of the Notice of Proposed Rulemaking in the Federal Register. You may submit comments electronically at https://www.regulations.gov/. Once the 60-day period has closed, the DOL will take some time to consider the comments and then subsequently issue the final rule. The DOL has also posted a Fact Sheet and Frequently Asked Questions on the proposed rule to its Overtime Rule webpage.

Notably, many employers had already come into compliance with the last version of the revised overtime rule, so the revised rule should have no impact on them. Employers that were less proactive at that time may await the issuance of the final rule before taking any steps. There will be some period of time after the final rule is issued before it takes effect, which will allow for those employers to plan for compliance.

]]>https://www.laboremploymentreport.com/2019/03/08/dol-proposes-new-overtime-rule-increasing-required-salary-level-for-exempt-employees/feed/0We Sued the DOL, and the DOL Blinkedhttps://www.laboremploymentreport.com/2018/07/18/we-sued-the-dol-and-the-dol-blinked/
https://www.laboremploymentreport.com/2018/07/18/we-sued-the-dol-and-the-dol-blinked/#respondWed, 18 Jul 2018 18:40:52 +0000https://www.laboremploymentreport.com/?p=2982Back in 2016, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which Shawe Rosenthal is a member, we filed suit against the U.S. Department of Labor to block the DOL’s new interpretation of the “persuader rule,” which is the advice exemption of the Labor Management Reporting and Disclosure Act (“LMRDA”). Several other suits were filed as well, a nationwide injunction was issued by a federal court in Texas, the DOL issued a proposed rule to rescind the new interpretation, and now, repeatedly citing the favorable decisions in our lawsuit and directly quoting the comments to the DOL’s proposed rule we submitted on behalf of Worklaw, the DOL has officially rescinded the rule.

As we explained in a previous blog post, the LMRDA requires reporting of certain information when an employer hires a consultant to persuade employees in the context of a union election or collective bargaining. The DOL under the Obama Administration sought to expand the scope of the reporting requirement so greatly that it would have swallowed a statutory exemption from reporting for advice offered to employers behind the scenes – an exemption intended to allow employers to engage in confidential communications with their attorneys. That exemption had been in place for over 50 years.

The Obama Administration’s approach was inconsistent with the statutory language of the LMRDA, as well as the U.S. Constitution. Shawe Rosenthal attorneys Mark Swerdlin, Eric Hemmendinger, and Parker Thoeni, along with our colleagues at Seaton, Peters & Revnew, P.A., led the charge on behalf of Worklaw to prevent the Obama Administration from enforcing its misinterpretation of the LMRDA. Parallel cases were also filed in Texas and Arkansas, and the Texas federal court issued a permanent nationwide injunction.

After President Trump took office, the DOL requested stays in the pending litigation, then announced last year that it would be issuing a Notice of Proposed Rulemaking (“NPRM”) to rescind the new rule. The NPRM also proposed considering a middle-ground between the long-standing rule and the Obama Administration’s misinterpretation of the LMRDA. We then provided comments to the DOL in support of the rescission, emphasizing that the DOL should rescind the rule and return to the prior interpretation rather than consider a middle-ground. And now, just as we requested in our comments to the DOL, the final rule is a return to what existed before.

In the DOL’s news release on the rescission, the Office of Policy’s Deputy Assistant Secretary Nathan Mehrens states, “For decades, the Department enforced an easy-to-understand regulation: Personal interactions with employees done by employers’ consultants triggered reporting obligations, but advice between a client and attorney did not…. By rescinding this Rule, the Department stands up for the rights of Americans to ask a question of their attorney without mandated disclosure to the government.”

As did we.

]]>https://www.laboremploymentreport.com/2018/07/18/we-sued-the-dol-and-the-dol-blinked/feed/0Fired for Kneeling During the Anthem? Maybe Not So Fast…https://www.laboremploymentreport.com/2017/09/28/fired-for-kneeling-during-the-anthem-maybe-not-so-fast/
https://www.laboremploymentreport.com/2017/09/28/fired-for-kneeling-during-the-anthem-maybe-not-so-fast/#respondThu, 28 Sep 2017 13:33:24 +0000http://www.laboremploymentreport.com/?p=2665It’s Ravens-Steelers week. All talk should be on whether T-Sizzle sacks Big Ben, can Flacco start getting the ball to his wideouts, and will the Ravens regroup following their disastrous showing in London? However, unless you are living under a rock with no Twitter account, you know what the talk is—will the Steelers stay in the tunnel again during the National Anthem (they say no), will players kneel or express their political views in any other manner, will fans start burning player jerseys in front of the stadium? This is no idle question, due to an online petition to remove the Ray Lewis statue outside the stadium after he knelt during the anthem at the last game, the Maryland Stadium Authority has placed extra security around the statue of the Ravens legend.

President Trump has spoken (and tweeted) his views loud and clear: it is a privilege to play a sport and be paid handsomely for doing so, and any player (as you know, he actually referred to them by another name) that disrespects the flag or our anthem should be fired. Regardless of your views on that subject, can an owner fire a player for doing so? Can the National Football League discipline a player for doing so? The answer is complicated.

First, the players have a collective bargaining contract with the NFL. The CBA and League Rules addresses player conduct and in what circumstances the League may fine or suspend a player. The League routinely fines players for excessive hits on the field. The League has obviously suspended players for off-the-field conduct, especially since the Ray Rice (knocking his then-fiancee, now wife, out in an elevator) debacle. There is no rule in the NFL rule book governing how players are to conduct themselves during the playing of the anthem. The NFL Game Operations Manual does, however, contain guidelines on how players are to act during the anthem but these are suggestions, not mandatory requirements. And, even if the League were to act based on the CBA or League policies, bear in mind that any League-issued discipline related to anthem protests would be subject to the contract’s grievance and arbitration process. You know how that goes—see you in court Tom Brady and Ezekiel Elliot.

Regarding the question of a team firing a player, the CBA is also relevant. In a typical union shop, employers can terminate employees only for just cause. If a team decides a player’s protest has placed the team in a negative light before the public, that might be enough to satisfy the CBA and the player’s contract. However, you may ask, what about the player’s right to free speech? After all, the Supreme Court has held that the First Amendment’s right to free speech allows someone to burn the U.S. flag in protest; surely kneeling during the anthem is protected. This is a tricky area given that a private entity would be the one taking action in response to a political statement. The First Amendment (or equivalent right in a state constitution) applies to the government, not private actors: “Congress shall make no law …abridging the freedom of speech….”

Normally, employees have no right to free speech, nor any of the other rights enumerated in the Bill of Rights, in a private employment setting. However, last I checked, the Ravens do not play in a privately owned warehouse in an office park. They play at M&T Bank Stadium, a public edifice paid for at great expense by the taxpayers of Maryland. Does that change the calculus as to whether the protest is protected speech? Even if the stadium is considered a public forum, the team (a privately owned entity) must qualify as a “state actor” for the First Amendment to apply. That question is not so easily answered, and the legal analysis is likely way more than most readers of this blog are looking for. Suffice to say, do not be so quick to fire the “son of a b—-,” unless you truly enjoy America’s other favorite national pastime—litigation!

]]>https://www.laboremploymentreport.com/2017/09/28/fired-for-kneeling-during-the-anthem-maybe-not-so-fast/feed/0What, Did the Judge Draft Ezekiel Elliott for his Fantasy Football Team?https://www.laboremploymentreport.com/2017/09/14/1-47/
https://www.laboremploymentreport.com/2017/09/14/1-47/#respondThu, 14 Sep 2017 14:46:15 +0000http://www.laboremploymentreport.com/?p=2648Last week we had our firm’s Fantasy Football draft. Ezekiel Elliott went at the end of Round 2, behind usual top running back picks David Johnson and La’Veon Bell, but also behind lesser runners Melvin Gordon and Jordan Howard. Everyone knows that Zeke would have been a top five draft choice had he not already been suspended by NFL Commissioner Roger Goodell (aka the most hated man in Foxboro, MA), whose decision was then upheld by a labor arbitrator. I’m kicking myself for taking Atlanta’s running back Devonta Freeman instead of Elliott. Why, you say? Should I have known that Elliott was going to get his 6-game suspension enjoined? Well, if I had given any thought to the fact that the judge assigned to review Elliott’s case was the same judge who threw out the Department of Labor’s revised overtime regulations (while questioning whether the DOL has the authority to set the required salary level for the overtime exemptions, which it has done for 70 years), I might have realized that Zeke had drawn the best judge this side of Waco.

U.S. District Judge Amos Mazzant, from the Eastern District of Texas (i.e., not even some judge sitting on an island in the Pacific, as Attorney General Sessions is so fond of saying), has rewarded risky fantasy football owners all over who used a high draft pick on Elliott. And, once more you ask, shouldn’t I have seen this coming?

Well, as the NFL pointed out in its brief to the U.S. Court of Appeals for the Fifth Circuit seeking to lift Judge Mazzant’s injunction, review of labor arbitration awards is extremely limited given the strong federal policy in favor of arbitration. Labor lawyers like to say that unless you catch the arbitrator taking a bribe from one of the parties to the arbitration, it’s next to impossible to get one of these decisions overturned. Now, to be fair, Judge Mazzant has not ruled that the arbitration decision in the Elliott case is to be overturned. That part of the case is still to come. But, he did rule that Elliott did not receive a fundamentally fair arbitration hearing and that he would suffer irreparable harm if the suspension was not stayed while the case proceeded.

Although criminal charges were not filed against Elliott, the NFL conducted its own investigation into the domestic violence allegations against him. Goodell imposed the 6-game penalty based on the investigation report, a transcript of an interview with Elliott, and some materials submitted by Elliott. The players’ Union then sought arbitration over Goodell’s decision. During the arbitration hearing before NFL-appointed arbitrator Harold Henderson (a former long-time NFL executive), after the Arbitrator granted the Union’s Motion to require one of the two investigators hired by the NFL to testify, the Union and Elliott discovered that that investigator did not find credible the woman who had accused Elliott of domestic violence. The Union alleged in the injunction proceeding before Judge Mazzant that the NFL had withheld information regarding that investigator’s assessment of the accuser from the Union, Elliott, and possibly even the Commissioner. Judge Mazzant agreed, and also found that the Arbitrator wrongly denied the Union access to important procedural requirements (i.e., investigator notes, cross examination of the accuser, and denial of the opportunity to question Goodell – the decision maker – about what he knew before he imposed the penalty.) Although the denial of witnesses and documentary evidence usually falls within the discretion of an arbitrator, Judge Mazzant found the denial of key witnesses and documents amounted to serious misconduct by the Arbitrator under the facts of this case.

Now, there’s no guarantee that, when the full case is heard, Judge Mazzant will overturn the suspension. Nor, is there any guarantee that the Fifth Circuit will allow Judge Mazzant’s injunction ruling to stand—after all, the hated (at least in Baltimore Raven Nation) Tom Brady got a federal district judge to rule in his favor before the Second Circuit Court of Appeals “rightfully” sat down the great deflator for four games. So, I guess the takeaway is maybe I won’t lose every matchup with my league’s Elliott drafter if the Fifth Circuit follows what the Second Circuit did in the Brady case.

]]>https://www.laboremploymentreport.com/2017/09/14/1-47/feed/0Animal Subcontracting – Getting the Union’s Goat!https://www.laboremploymentreport.com/2017/08/10/1-42/
https://www.laboremploymentreport.com/2017/08/10/1-42/#respondThu, 10 Aug 2017 18:24:38 +0000http://www.laboremploymentreport.com/?p=2613Last year, Fiona’s sister told her that a herd of goats, complete with a goat herder, had moved into the park next to her house. They were brought in to clear certain park areas of overgrown vegetation. What a charming, effective, and environmentally-friendly solution! Apparently Western Michigan University had the same thought, because it also brought in goats to clear areas of the campus. But a union has decided to butt in and has filed a grievance against the University, claiming that the goats were performing “union work!” (We can see it now, brave goats crossing a picket line to get to their jobs!)

As reported by the Grand Rapids Patch, the University brought the goats in to clear a 16-acre lot. They are an appealing and logical option for a number of different reasons:

They eat everything, including poison ivy, without the same issues that humans may have in dealing with certain vegetation and without requiring the use of herbicides (that are potentially dangerous to human health and the environment).

They can cover uneven areas that are not conducive to the use of machinery.

They don’t disturb the ground in ways that facilitate the sprouting of seeds.

They will work 24 hours a day (without overtime pay or smoke breaks).

And, they are a significant cost savings – a university horticulturalist overseeing the project, Nick Gooch, told the Patch that it costs about $1,618 to clear a quarter acre using machinery, labor, and herbicides, but apparently the goats would cut $1,280 from the costs (i.e. they would cost about $338 for the same work. So, to do the math on a 16 acre lot: traditional human methods would cost $103,552 while the goats would cost $21,632 – a savings of almost $82,000!!!).

But the union, AFSCME Local 1668, says that farming out the work to goats violates its collective bargaining agreement (CBA) with the University. Apparently, the job of cutting grass is a union job covered by the CBA, and therefore, according to the union, this work should have gone to union members rather than being subcontracted out to goats. The University, however, says that the goats aren’t cutting grass, but rather are removing weeds and vegetation overgrowth—work apparently not covered by the CBA.

While we have not seen the grievance or the CBA, the outcome of the grievance will likely turn on the actual language in the CBA and the parties’ past practice. Does the CBA spell out specific duties that grounds staff are to exclusively perform? Is there language that defines landscaping work or grass cutting? And, if so, does landscaping or cutting grass have to be done by employees with machinery? Does the CBA mention weed removal or other tasks? What about past practice—has the University used non-union personnel for this task previously, and if so, has the Union grieved it? Even if the work is deemed to be union work, does the CBA contain subcontracting language and, if so, does the subcontracting (to goats) comply with such terms? The CBA may even discuss where temporary workers are permitted, but we’re not sure if goats would be deemed to be temporary labor!

In all seriousness, this situation emphasizes the importance of focusing on the language in the CBA during collective bargaining negotiations. The employer should think about how to retain the flexibility to incorporate technological (or biological) developments in the industry in the future. The employer should also pay close attention to subcontracting rights under the CBA.

And lest anyone start taking up the cause for amending civil rights statutes and wage/hour laws to protect goats, the University is not contracting with the goats directly. Believe it or not, there is apparently a thriving business out there of companies supplying goats and goat herders for this purpose. No kidding!

]]>https://www.laboremploymentreport.com/2017/08/10/1-42/feed/0We Sued the Department of Labor, and Now It Has Backtracked on the Persuader Rulehttps://www.laboremploymentreport.com/2017/06/14/we-sued-the-department-of-labor-and-now-it-has-backtracked-on-the-persuader-rule/
https://www.laboremploymentreport.com/2017/06/14/we-sued-the-department-of-labor-and-now-it-has-backtracked-on-the-persuader-rule/#respondWed, 14 Jun 2017 20:02:34 +0000http://www.laboremploymentreport.com/?p=2546

As we previously blogged, Shawe Rosenthal, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which we are a member, filed suit last year against the U.S. Department of Labor to block the DOL’s new interpretation of the advice exemption of the Labor Management Reporting and Disclosure Act (“LMRDA”), or the “persuader rule.” And now, on Monday, June 12, 2017, the DOL announced a Notice of Proposed Rulemaking (“NPRM”) that proposes to rescind that new persuader rule interpretation.

The LMRDA requires reporting of certain information when an employer hires a consultant to persuade employees in the context of a union election or collective bargaining. The Department of Labor under the Obama Administration sought to expand the scope of the reporting requirement so greatly that it would have swallowed a statutory exemption from reporting for advice offered to employers behind the scenes – an exemption intended to allow employers to engage in confidential communications with their attorneys. That exemption had been in place for over 50 years.

The Obama Administration’s approach was inconsistent with the statutory language of the LMRDA, as well as the U.S. Constitution. Shawe Rosenthal attorneys Mark Swerdlin, Eric Hemmendinger, and Parker Thoeni, along with our colleagues at Seaton, Peters & Revnew, P.A., led the charge on behalf of Worklaw to prevent the Obama Administration from enforcing its misinterpretation of the LMRDA. Parallel cases were also filed in Texas and Arkansas, and the Texas federal court issued a permanent nationwide injunction, which has preserved the status quo.

Following the election of President Trump, it quickly became apparent that the DOL was going to take a different approach. The Trump Administration sought stays in the currently pending cases to determine how it would treat the Obama Administration’s rule. Surprisingly, rather than concede in the pending litigation and allow the permanent injunction to stand, the DOL has now proposed to rescind the Obama Administration rule and reconsider its approach.

The DOL’s strategy is curious. If, as many believe, the Trump Administration simply disagreed with the Obama rule and sought to maintain the status quo, it could have simply stopped defending the rule in litigation. Alternatively, it could have issued a NPRM that proposed rescission without discussing a need for reconsideration and issuance of a rule that is more well-reasoned than the rule issued by the Obama Administration. One would expect that, if something akin to the Obama rule is still under consideration, it would make little sense to go through the rulemaking process to rescind a rule that is on the books but not enforceable in order to come up with a similar rule. It appears that the DOL may be considering some new rule between complete rescission and the position taken by the Obama Administration in 2016. Thus, it is possible that the current NPRM is a stopgap measure intended to improve the DOL’s litigation position in the pending cases.

It remains to be seen how this action will impact the currently pending litigation, but we certainly encourage employers to submit comments to the NPRM, within 60 days from its release on June 12, 2017, urging the DOL to go back to the prior rule. Comments may be submitted electronically here.

]]>https://www.laboremploymentreport.com/2017/06/14/we-sued-the-department-of-labor-and-now-it-has-backtracked-on-the-persuader-rule/feed/0HR Lessons from the Comey Terminationhttps://www.laboremploymentreport.com/2017/05/18/1-32/
https://www.laboremploymentreport.com/2017/05/18/1-32/#respondThu, 18 May 2017 15:48:59 +0000http://www.laboremploymentreport.com/?p=2512Whether you live in a blue state, red state, or just in the state of denial, you surely have heard by now about President Trump’s firing of FBI Director James Comey. And whether you think the termination was “way overdue” or “bat sh– crazy,” we can all probably agree that it was not exactly HR 101 when it comes to best practices for handling an employee termination. So, what are some of the lessons we can draw from this situation?

You should terminate an employee as close in time as possible to the events that led to the termination decision in the first place. We have all heard the horror stories of an employer finally deciding to pull the trigger on a termination but delaying it for a day or two, or even a week or two, for whatever reason. Then, before it can tell the employee she’s fired, the employee comes to work wearing a Union button, or the employee slips and falls on the job, or the employee alleges race discrimination or that she’s paid less than male co-workers doing the same job. What was once a perfectly defensible termination now looks like retaliation. Moreover, a third party (like a jury or the EEOC) called upon to rule upon the bona fides of the termination, may find the passage of time from the supposedly terminable event to the actual timing to be inherently suspicious, making the fact finder less likely to credit your reasoning for the discharge. In the Comey case, some have questioned the stated rationale for the discharge of how Comey handled the Clinton email investigation given the significant passage of time from those events. Those persons have speculated that if that was the real reason, why didn’t President Trump fire Comey shortly after inauguration.

Be consistent with your rationale for the termination. I always counsel my clients that if you give one reason for the discharge at an unemployment compensation hearing, another during the EEOC proceedings, and yet a third rationale at trial, it is likely that a fact finder will view the shifting rationales with suspicion. As we all know, the White House originally pointed to Deputy Attorney General Rod Rosenstein’s memo finding fault with the email investigation, but President Trump subsequently stated that he would have fired Comey regardless of the memo. This change in explanation makes some people question what the “real” reason was for the decision. In an employment case, a plaintiff could use such shifting rationales to argue that the real reason must have been his age or his race or the fact that he had complained about discriminatory treatment.

Treating the terminated employee with respect and courtesy may help to avoid litigation and liability. Believe me; we share your pain of dealing with difficult employees. Oftentimes when you get to the point of termination, you have no more patience with the soon to be former employee. However, I have seen very little good come of exhibiting disregard for the employee on the way out. Our firm litigated a case years ago where our client had terminated the employee on Christmas Eve for what it believed were very good and legitimate reasons. You better believe that plaintiff’s counsel started every question with, “So tell me, when the Company fired you on Christmas Eve….” That intro was used when the question was “what year did you start working for the Company?” So, delivering a termination letter to the employee’s office when he’s across the country and having him learn of his termination on TV may not win you any points at trial.

Seek counsel early on to avoid surprises. From all accounts, the Trump team, believing that the Democrats would be glad that Comey finally got what he deserved, was shocked when Democrats reacted negatively to the Comey firing. Particularly with terminations of high level officials or of individuals who could potentially raise management issues, having experienced counsel walk you through the termination strategy may be of great value. Outside counsel can help you hone in on the legitimate nondiscriminatory reasons for the termination, tell a consistent story in whatever forum(s) you may need to explain your actions, and avoid missteps in communicating the decision to the employee that might goad him into filing legal action. After all, you never know if the person you are about to fire may have a “smoking gun” memo tucked away somewhere.

]]>https://www.laboremploymentreport.com/2017/05/18/1-32/feed/0A Battle for the Soul of the NLRB?https://www.laboremploymentreport.com/2017/04/27/1-29/
https://www.laboremploymentreport.com/2017/04/27/1-29/#respondThu, 27 Apr 2017 13:46:37 +0000http://www.laboremploymentreport.com/?p=2494For several years we have watched the National Labor Relations Board take ever-more aggressive positions that (in our view) ignore the realities of the modern-day workplace and business operations (or really, common sense). Think handbook cases, Facebook cases, email cases….. you get the picture. Republican members of the Board have vehemently protested the actions of the Democratic majority, to no avail. So with the change to a Republican administration and the recent appointment of the sole Republican Board member – Philip Miscimarra – first to the Acting Chairman and now regular Chairman role, we had great expectations that the Board would return to a more balanced (i.e. sane) perspective.

But it appears that even under the new Republican administration, representatives of the National Labor Relations Board continue to seek to expand its definition of employees (and consequently the Board’s reach). We previously blogged about the NLRB General Counsel’s memo in which he opined that scholarship football players in Football Bowl Subdivision (FBS – formerly known as Division I) private sector colleges and universities are employees under the National Labor Relations Act with the rights and protections of the Act. And the most recent example of this overreach is a Regional Director’s decision to order a union representation election for a unit of undergraduate student resident advisors at George Washington University. (I’m not sure about GWU, but I don’t recall the RAs on my dorm floor doing much work unless you count trying to steal the freshmen students’ girlfriends.)

The Board had previously rejected attempts by undergraduate students to unionize, but this case builds on the NLRB’s 2016 Columbia University decision, in which graduate student teaching and research assistants were deemed to be employees within the meaning of the National Labor Relations Act, as we discussed in our previous blog post, “The NLRB Changes Its Mind Again.” Reversing a twelve-year precedent that looked at the primary purpose of the relationship, the Board had stated that the existence of an economic component to the relationship, regardless of how slight as compared with other aspects of the relationship, was sufficient to establish employee status. In the present case, resident advisors receive a waiver of housing expenses as well as a stipend, and these economic benefits triggered an employment relationship, according to the Regional Director.

We expect this case to be escalated to the Board itself, which is awaiting the appointment of two more members. While we could confidently predict that an Obama-era Board would have upheld the Regional Director’s decision, that’s not so certain with the Board under President Trump. We would expect that Chairman Miscimarra and his to-be-named Republican colleagues will work to return the parameters of the Act back to a more reasonable place – but it appears that they will be battling internal forces that seek to expand those very same parameters.

Readers of this blog likely know the first reference. But, how about the second? Give yourself a hand if you said “Richard F. Griffin, Jr., General Counsel (GC) of the National Labor Relations Board.” GC Griffin, a holdover from the Obama administration, decided last week that the new Trump administration was not going to have all the fun in Washington, D.C. What is it that GC Griffin did, you ask? Well, he decided that your favorite running back from Stanford, or that dynamic wide receiver from Northwestern, are employees under the National Labor Relations Act, entitled to full protection under the Act!

You may remember that in 2014, the NLRB’s Chicago office issued a decision that Northwestern football players were employees under the Act and therefore had the right to unionize. A secret ballot election took place but the ballots were impounded while the case was appealed to the full Board in Washington, D.C. Surprisingly, as we discussed in our blog post, “NLRB Rejects Union for College Football Players,” the union-friendly Obama Board, citing competitive balance and the potential impact on NCAA rules, determined that it would not effectuate the policies of the Act to assert jurisdiction over the Northwestern scholarship football players, and therefore declined to do so. The Board noted that approximately 125 colleges and universities participate in the Division I Football Bowl Subdivision, with all but 17 of the universities being outside of the Board’s jurisdiction because they are state-run institutions – and therefore not “employers” under the Act. The Board punted on the issue of whether the football players were, in fact, employees.

In a memo, GC Griffin concluded, based on the record developed in the 2014 case, as well as a recent Board decision finding graduate teaching assistants at Columbia University to be employees under the Act (we blogged about that in “The NLRB Changes Its Mind Again“), that the scholarship football players in Football Bowl Subdivision (FBS – formerly known as Division I) private sector colleges and universities are employees under the NLRA with the rights and protections of the Act.

GC Griffin focused on the fact that the football players perform services for their colleges in return for compensation (i.e., scholarships). The services are performed subject to the college/university’s control in that the schools control the manner and means of the players’ work on the field and in numerous facets of their daily lives to ensure compliance with NCAA rules. GC Griffin expansively concluded that the Board’s determination not to proceed in one (little) representation case would undermine Section 7 protections afforded to all unorganized private sector employees who may never elect to form or support a union.

So, what does this mean? Well, if the scholarship linebackers (but not those without scholarships) at Boston College think that their coach is running unsafe practices, they can speak out, and the school cannot kick them off the team for doing so (but they could kick off the non-scholarship players). The scholarship receivers (but not those without scholarships) at the University of Southern California could band together and work on reforming NCAA rules so scholarship football players (but not those without scholarships) can share in the massive profits generated by college football, and if their coach reprimanded or disciplined them for doing so, the NLRB will process an unfair labor practice charge filed by the scholarship players. (Apparently the non-scholarship players – those doing the same “work” under the same standards – are left out in the cold! I know, since they do not receive “compensation” for their “work,” maybe they should file wage payment claims under the FLSA!)

The GC’s Memorandum is obviously controversial. One GOP representative called on GC Griffin to either rescind the memo or quit. But, fear not Alabama Crimson Tide fans. Your university is a public institution so this ruling does not apply to your team. Coach Saban can continue to run roughshod over the rest of college football without NLRB interference!

]]>https://www.laboremploymentreport.com/2017/02/10/1-18/feed/0Automobile Service Advisors: Exempt or Non-Exempthttps://www.laboremploymentreport.com/2017/01/12/1-14/
https://www.laboremploymentreport.com/2017/01/12/1-14/#respondThu, 12 Jan 2017 19:38:45 +0000http://www.laboremploymentreport.com/?p=2378For nearly 35 years, automobile dealers relied on the U.S. Department of Labor’s position that service advisors fell within the Fair Labor Standards Act’s exemption from overtime for “salesmen, partsmen, or mechanics primarily engaged in selling or servicing automobiles.” In 2011, the DOL “upended” this interpretation by issuing regulations specifying that the exemption did not apply to “sales personnel” unless they sell vehicles. Thus, service advisors were deemed non-exempt.

In June 2016, in Encino Motorcars, LLC v. Navarro, No. 15-415, 2016 WL 3369424 (2016), the Supreme Court held that the 2011 regulation was not entitled to deference because it was issued without the requisite reasoned explanation for a change. The Court did not decide whether service advisors are, or are not, exempt. The U.S. Supreme Court remanded the case to the U.S. Court of Appeals for the Ninth Circuit (which had decided the case below) with instructions that the appellate court not give any deference to the DOL’s regulations. In other words, the appellate court should review the duties of the position (the sale of repair and maintenance services) and decide if the duties fell within the statutory exemption.

On January 9, 2017, the Ninth Circuit issued its decision on remand (Case No. 13-55323, 2017 WL 74713 (9th Cir. 2017)). The Ninth Circuit concluded that Congress did not intend for the overtime exemption to include service advisors. According to the Ninth Circuit, service advisors are not “primarily engaged in” the selling or servicing of cars. Furthermore, while service advisors may be salesmen in a general sense, the court reasoned that they are not “primarily engaged in” automobile sales because they do not actually sell any cars. Following this same, plain-language logic, the court also concluded that the balance of the exemption (for partsmen or mechanics) did not apply, because a service advisor does not perform repairs or provide automobile maintenance. Instead, as the Ninth Circuit stated, a service advisor “wait[s] on customers who bring their automobiles in for maintenance and repairs.”

While this case is bad news for automobile dealers in California, Arizona and other far Western states within the Ninth Circuit, the U.S. Court of Appeals with jurisdiction over Maryland (as well as Virginia, West Virginia and the Carolinas) is the Fourth Circuit. The Fourth Circuit in Walton v. Greenbrier Ford, Inc., 370 F.3d 446 (4th Cir. 2004), determined that the service advisor “had a key role” in the automobile dealership’s service operations, which was sufficient to label the service advisor as a “salesman” under the FLSA exemption. The court specifically emphasized that at least half of the service advisor’s “specific job responsibilities” were “service and sales related functions.”

When there is a split among the Circuit Courts on a question of Federal law, the U.S. Supreme Court is the final arbiter of what “the law is” (subject to Congress’ right to legislate, with Presidential consent, if it thinks the highest court got it wrong). Therefore, we expect Encino Motorcars to petition, once again, for the Supreme Court to hear the case and decide which Circuit has it right. Auto dealers in all states will, therefore, need to “stay tuned.”